11††††††† NOTES TO THE ACCOUNTS

 

1††††††††† Significant Accounting Policies

 

i)††††††††† Accounting convention

 

The financial statements are prepared under the historical cost convention in accordance with applicable Accounting Standards issued by the Institute of Chartered Accountants of India and relevant presentational requirements of the Companies Act, 1956.However, since the Power Generating Division of the Company is governed by the provisions of the Electricity (Supply) Act, 1948, the provisions thereof prevail wherever these are inconsistent with the provisions of the Companies Act, 1956.

 

ii)†††††††† Fixed assets

 

All fixed assets are stated at cost of acquisition or construction.Financing costs attributable to acquisition or construction of fixed assets are included in the gross book value of fixed assets to which they relate.

 

iii)               Depreciation

 

A)                  Power Generating Division

 

Depreciation charge on assets is provided on the straight line method in terms of the Electricity (Supply) Act, 1948 on the basis of Central Government Notification No. S.O. 266 (E) dated March 29, 1994, from the year immediately following the year of commissioning of the assets in accordance with the clarification issued by the Central Electricity Authority as per the accounting policy specified under the Electricity (Supply) Annual Accounts Rules, 1985.As such no depreciation is provided on the assets commissioned during the year.

 

B)                  Energy Systems Division

 

Depreciation charge on assets is provided on the straight line method at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956.

 

iv)                Inventories

 

A)†††††††† Materials & components and stores & spares are valued at lower of cost or net realisable value. The cost is determined on the basis of moving weighted average.Loose tools are valued at depreciated value, depreciation has been provided on straight line method at the rate of ten percent per annum.

 

B)†††††††† Contract work in progress representing work done but not billed is valued at cost.

 

 

 

 

 

v)                   Foreign currency transactions

 

Transactions involving foreign currencies are recorded at the rates of exchange prevailing at the time of transaction.

 

Foreign currency liabilities incurred for the acquisition of fixed assets are translated at exchange rates prevailing on the last working day of the year.

 

The net variation arising out of the said translation is adjusted to the cost of fixed assets except where such variation is to be recovered from Assam State Electricity Board in accordance with the provisions of the "Power Purchase Agreement" in which case such variation is treated as a recoverable asset under Loans and advances.

 

Other foreign currency assets and liabilities are similarly translated and the gain/loss arising out of such translation is adjusted in the profit and loss account.

 

vi)                Retirement benefits

 

The Company's contributions towards provident fund, superannuation fund (funded by payments to Life Insurance Corporation of India under its Group Superannuation Scheme) and approved gratuity fund (funded by contributions to Life Insurance Corporation of India under its Group Gratuity Scheme) are charged to revenue.

 

Liability for leave entitlement is accounted for based on the assumption that such benefit is payable to all eligible employees at the end of the accounting year as per the Companyís rules.

 

vii)              Revenue recognition

 

A)†††††††† Power Generating Division

 

Revenue from power supply together with claims made on customers is recognised in terms of Power Purchase Agreements.

 

B)                  Energy Systems Division

 

i)                    Revenue from contracts is recognised on percentage completion method and accounted for inclusive of excise duty recovered, where applicable. Accordingly, revenue is recognised when cost incurred (including appropriate portion of allocable overheads) on the contract is estimated at 30 % or more, on the total cost to be incurred (including all foreseeable losses and an appropriate portion of allocable overheads) for the completion of contract, wherever applicable.

 

 

 

 

 

 

ii)                 Revenue on account of design and engineering contracts is recognised on acceptance by the customers.

iii)               Warranty and liquidated damages are accounted for as and when the claims are settled / payments made.

iv)                Scrap generated out of project work in progress is accounted for on realisation.

 

viii)           Income-tax

 

Current income-tax liability is provided in accordance with the provisions of the Income-tax Act, 1961.

 

Deferred tax is recognised, subject to the consideration of prudence, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

 

ix)                Lease transactions

 

In respect of equipments taken on lease, lease rentals payable have been segregated into cost of asset and interest component by applying an implicit Internal Rate of Return. The cost component is amortised over the useful life of the asset and the interest component is charged as period cost.Lease payment in excess of or less than the total of cost amortisation and interest component for the period is carried as prepaid sums or liabilities respectively.

 

 

2                    Contingent liabilities in respect of

Year ended

March 31, 2004

Rs. in lacs

Year ended

March 31, 2003

Rs. in lacs

Income-tax matters under dispute

 

Sales taxdemand under dispute and stayed by Appellate Tribunal

(Net of advances of Rs. 12.50 lacs

Previous year Rs. 12.50 lacs)

 

1.91

 

31.09

 

 

1.91

 

31.09

 

 

3††††††††† Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs.Nil (previous year Rs. 2.43 lacs)

 

4 †††††††† Revenue from power supply to Assam State Electricity Board and Central Coalfields Limited has been invoiced on the basis of the Power Purchase Agreements with the parties.However, these parties have made payments (including payments made subsequent to March 31, 2004) mainly on the basis of provisional rates, leaving outstanding dues aggregating Rs. 12067.76 lacs(previous year Rs. 13529.47 lacs) which have been included under 'Sundry debtors' in schedule 5. Necessary adjustments, if any, will be made in the accounts on final acceptance of the Company's invoices / claims by the concerned parties.

 

 

5††††††††† Sundry debtors include Rs.1039.80 lacs (previous year Rs. 1287.90 lacs) pertaining to the 'Energy Systems Division' which was acquired by the Company prior to the close of business hours on March 31, 2001. The management has confirmed to the auditors that these debts are good and fully recoverable based on the status of ongoing discussions / correspondence with the concerned parties.In respect ofthe mattersunder arbitration, the managementís viewis based on current status of the hearings already taken place.

 

6 †††††††† Segment Reporting

 

Based on the guiding principles given in the Accounting Standard (AS) 17 - 'Segment Reporting' issued by the Institute of Chartered Accountants of India, the primary segment of the Company consists of two segments i.e. 'Power Generating Division' (PGD) and 'Energy Systems Division' (ESD).

 

The PGD has built two power Plants in the State of Assam on Build, Own, Operate and Maintain basis (BOOM) for generating and supplying electricity to Assam State Electricity Board and three Power Plants on similar basesin the state of Jharkhand for generating and supplying electricity to Central Coalfields Limited (CCL), a subsidiary of Coal India Limited (CIL).

 

The ESD is engaged in the business of executing turnkey power plants as 'Engineering, Procurement and Construction (EPC) Contractors.

 


Financial information about business segments is presented in the table given below:

 

 

 

Rs in lacs

 

 

Year ended

March 31, 2004

Rs. In lacs

Year ended

March 31, 2003

Rs. in lacs

Particulars

Power

Generating Division

Energy Systems Division

Total

Power

Generating Division

Energy Systems Division

Total

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

External sales

11485.68

-

11485.68††††††

11051.58

64.47

11116.05

 

Other income

6.76

8.22

14.98

 

 

31.20

Total revenue

††††††††

††††††††

11500.66

 

 

11147.25

 

 

 

 

 

 

 

Segment results

4073.02††††††††

(271.42)

3801.60

5024.17

(30.48)

4984.32

Unallocated expenses

†††††††††††††

††

(482.04)

 

 

(372.24)

Operating profit

††††††††††††††

†††††††††

3319.56

 

 

4612.08

Interest income (net of provisions for doubtful debts)

††††††††††††††

†††††††††

14.98

 

 

 

27.86

Interest expense

†††††††††††††

††

(2453.01)

 

 

(3320.86)

Loan processing charges and front end fee paid

 

 

 

(54.69)

 

 

--

Guarantee commission

 

 

(123.62)

 

 

181.36

Income taxes - current

†††††††††††††††

††††††††††

(54.06))

 

 

(90.96)

†††††††††††††††††††† - deferred

 

 

(3.27)

 

 

(4.81)

Net profit

††††††††††††

†††††††††

645.89††††††

 

 

1041.95

 

 

 

 

 

 

 

Other information

 

 

 

 

 

 

Segment assets

43928.68

1950.33

45879.01

44687.03

2151.10

46838.13

Unallocated assets

††

††

247.63

 

 

473.07

Total assets

††††††††††††††††††

 

46126.64

 

 

47311.20

Segment liabilities

1165.67

868.96

2034.63

1902.82

1012.19

2915.01

Share capital and reserves

 

 

14377.55

 

 

13731.66

Secured and unsecured loans

 

 

29208.99

 

 

29105.20

Unallocated liabilities

††

††

505.47

 

 

1559.33

Total liabilities

†††††††††††††††††††

868.96

46126.64

 

 

47311.20

Capital expenditure

1045.21

-

1045.21

1626.86

 

1626.86

Depreciation

2118.72

6.69

2125.41

1765.90

7.89

1773.79

Non cash expenses other than depreciation

NIL

 

 

30.27

 

30.27

 

Geographical Segments

 

Since the Company's activities / operations are within India and the risks and returns are the same, there is only one geographical segment.

 


Segment accounting policies

 

In addition to the significant accounting policies applicable to the business segment as set out in note 1 of Schedule 11 'Notes to the Accounts', the accounting policies in relation to segment accounting are as under:

 

a)                  Segment assets and liabilities:

 

Segment assets include all operating assets used by a segment and consist principally of operating cash, debtors, inventories and fixed assets, net of allowances and provisions which are reported as direct offsets in the balance sheet. Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities. Segment assets and liabilities do not include share capital, reserves and surplus, loan funds, dividends payable, income-tax (both current and deferred) and certain other assets and liabilities not allocable to a particular segment on a reasonable basis. While most of the assets / liabilities can be directly attributed to individual segments, the carrying amount of certain assets and liabilities pertaining to both segments are allocated to the segments on a reasonable basis.

 

b)                   Segment revenue and expense:

 

Joint revenue and expenses are allocated to the two business segments on a reasonable basis. All other segment revenue and expenses are directly attributable to the segments.

 

c)                   Unallocated expenses:

 

Unallocated expenses represent general administrative expenses, head-office expenses and other expenses that arise at the Company level and relate to the Company as a whole. As such, these expenses have not been considered in arriving at the segment results.

 

7††††††††† Managerial remuneration

 

 

Year ended

March 31, 2004

Rs. In lacs

Year ended

March 31, 2003

Rs. in lacs

 

a)††† Directors' remuneration:

 

-††† Salary and allowances††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††

†††† Contribution to provident fund

and superannuation fund

-          Value of perquisites

-          Commission

 

 

 

 

b)†† Directorsí sitting fees

 

 

 

 

39.17

 

8.35

25.27

20.00

---------------

92.79

---------------

†††††††††††††††††††

2.55

 

††††††††††††††††††††

††††

 

 

 

44.67

 

9.03

34.45††††††††††††††

20.00†††††††††††††

----------------

108.15†††††††††††

----------------

 

1.40

 

 

Computation of net profit in accordance with section 309(5) of the Companies Act, 1956 and commission payable to theDirectors:-

 

 

 

Year ended

March 31, 2004

Rs. In lacs

Year ended

March 31, 2003

Rs. in lacs

 

Profit for the year before taxation as per profit and loss account

 

Add: Managerial remuneration†††††††

Loss on sale/Discard of fixed Assets (net)

†††††††† Provision for Bad & Doubt-full debts

 

Net profit as per section 309(5) of the Companies Act, 1956

 

Upto a ceiling of 10% of the net profit

 

Maximum amount of commission payable

 

Restricted to:

 

 

 

703.22

 

92.79

435.34

1425.38

------------

 

2656.73

------------

265.67

 

192.88

 

20.00

 

 

 

1155.00

 

108.15

8.37

718.44

-----------

 

1989.96

------------

198.99

------------

110.84

 

20.00

Note:†† For the purpose of the above computation, depreciation for the year on fixed assets pertaining to the Power Generation division has been considered as per the provisions of the Electricity (Supply) Act, 1948 in lieu of depreciation under section 350 of the Companies Act, 1956.The Company has also received legal opinion supporting this treatment.

 

8 †††††††† Related party disclosures under Accounting Standard 18

 

a)                  Name of Related party and nature of related party relationship

 

Holding Company††††††††††††††††††† :†† DLF Universal Limited

 

Fellow Subsidiary Companies:†† DLF Golf Resorts Limited

††† DLF Services Limited

††† DLF Commercial Developers Limited

††† DT Cinemas Limited

††† DLF Recreational Foundation Pvt. Ltd

 

Key Management Personnel :†† Mr. R.S. Cheema, Managing Director

††††††††††††††††††††††† ††† Mr. C.P.Poonacha, Whole time Director

††††††††††††††††††††††††††††††††††††††††††††††††††††††††††† ††† Mr. J.K. Ahuja, Whole time Director††††††††

 

 

 

 

 

 

 

 

 

 

††††††††††††††††††††††† ††† †††††††††††††††††††††††††††††††

b)                   Transactions with related parties during the year

 

i)††††††††† Transactions with the Holding Company and Fellow Subsidiaries

††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††† Rs in lacs

 

 

Year ended

March 31, 2004

Rs. In lacs

Year ended

March 31, 2003

Rs. In lacs

††††††††††††††††††††††† ††††††††††††††††††††††† †††††††††††

Holding Company

Fellow Subsidiaries

Holding Company

Fellow Subsidiaries

Interest Paid/payable

417.71

0.08

33.60

 

Loan received

27102.35

-

2563.00

 

Loans repaid

6800.00

-

788.00

 

Sale of fixed assets

 

3.50

 

308.16

Maintenance charges and others

 

9.10

0.28

42.20

Balances payable at the year end

 

 

 

 

††††††† Loan

22667.35

9.46

2365.00

 

††††††† Other Payables

891.87

 

545.15

33.77

 

ii)†††††††† Transactions with Key Management Personnel

††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††† Rs in lacs

 

Year ended

March 31, 2004

Rs. In lacs

Year ended

March 31, 2003

Rs. in lacs

Remuneration

92.79

108.15

Rent

9.60

9.60

Recovery of loan

2.67

2.27

Balance outstanding at the year end

 

 

†††††† Loans and advances

6.45

12.51

†††††† Payables

0.07

0.29

 

9 †††††††† Disclosure in respect of operating leases (entered on or after April1, 2001) under Accounting Standard - 19 "Leases" issued by the Institute of Chartered Accountants of India.

 

a)      General description of the Company's operating lease agreements:

 

The Company enters into operating lease agreements for taking on lease space for offices and residential premises for its employees. Some of the significant terms and conditions of the arrangements are:

 

-          agreements may generally be terminated by the lessee / either party by†††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††† serving one month's notice.

-          the lease arrangements are generally renewable on the expiry of the lease period subject to mutual agreement.

-          the Company shall not sublet, assign or part with the possession of the premises without prior written consent of the lessor.

 

b)†††††††† Lease rent charged to the profit and loss account Rs.899.01lacs.

 

10†††††† Particulars of capacity, generation and revenue of power

 

Particulars

Year ended

March 31, 2004

 

Year ended

March 31, 2003

 

Licensed

 

Installed (in MW)**

 

Generation (in lac units)

 

Revenue (in lac units)***

 

 

*

 

54.50

 

2367.10

 

2367.10

 

*

 

54.5

 

2055.94

 

2055.94

 

††††††††††† *†††††††††† Not applicable

††††††††††† **†††††††† As certified by the management and relied upon by the auditors being

a technical matter.

††††††††††† ***††††††† Excludes deemed generation.

 

11††††††† Other additional information

 

Description

Year ended

March 31, 2004

Rs. In lacs

Year ended

March 31, 2003

Rs. in lacs

 

a)        Value of imports on

CIF basis:

Stores and spares

Capital equipment

 

b)         Expenditure in foreign currency:

Interest

†††††† Travelling

 

 

 

15.87

647.30

††††††††††††††††††††††††††††††††††††††††††††††

†††††††††††††††††††††

85.23

25.59†††††††††††††††††††††††

 

 

 

182.72

 

 

 

228.95

††† 28.82

 

 


 

 

Year ended

March 31, 2004

Year ended

March 31, 2003

 

Rs.in lacs

% of total

consumption

Rs. In lacs

% of total

consumption

c)         Value of imported and indigenous

Materials consumed

-          Imported

-          Indigenous

 

 

 

Stores and spares†††

†††††† Consumed

-          Imported

-          Indigenous

 

 

 

 

 

-

3.50

--------

3.50

--------

 

 

27.84

261.38†††††

---------

289.22

---------

 

 

 

 

 

100.00

---------

100.00

---------

 

 

9.63

90.37

---------

100.00

---------

 

 

 

 

 

-

13.00

-------

13.00

-------

 

 

277.57

241.15

--------

518.72

--------

 

 

 

 

 

-

100.00

-------

100.00

-------

 

 

53.51

46.49

--------

100.00

--------

 

12††††††† Auditors' remuneration

 

 

Year ended

March 31, 2004

Rs. In lacs

Year ended

March 31, 2003

Rs. in lacs

 

a)             As auditors

b)             In other capacity

-          For tax audit

-          For special audit

-          For miscellaneous certificate, etc.

c)             Reimbursement of out of pocket expenses

 

 

4.32

 

 

 

 

0.02

 

0.10

 

4.32

 

 

 

 

 

 

 

 

 

 

13††††††† Future obligation for lease rentals, under finance lease arrangement entered into by the Company, amounts to Rs. 6503.79 lacs (previous year Rs. 6618.73 lacs).

 


14††††††† Earnings per share as per Accounting standards AS 20

 

††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††† Year ended††††††††††††††††† ††††††† Year ended

††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††† March 31,2004††††††††††† ††††††† March 31, 2003

††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††† (Rs. in lacs)†††††††††††††††† †††††††††††† (Rs. in lacs)

 

Profit after Tax††††††††††††††††††††††††††††††††††† 645.89†††††††††††††††††††††††††††††††††††† 1041.95†††††††††††††††††††††††††††††††††† ††††††††††††††††††† †††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††

Less: Preference dividend††††††††††††††††† NIL††††††††††††††††††††††††††††††††††††††††† 125.00††††††††††††††††††††††††††††††††††††

Profit available for equity share †††††††

holders (a)†††††††††††††††††††††††††††††††††††††††††† 645.89†††††††††††††††††††††††††††††††††††† 916.95

Number of equity shares

of Rs 10 each (b)††††††††††††††††††††††††††††††††† 693.20†††††††††††††††††††††††††††††††††††† 693.20

(in lacs)

Basic earnings per shares†††††††††††††††† †††† 0.93††††††††††††††††††††††††††††††††††† ††† 1.32

Potential savings in interest cost

net of tax (c)††††††††††††††††††††††††††††††††††††††† ††† NIL†††††††††††††††††††††††††††††††††††† 255.00

††††††††††† Number of potential equity shares

of Rs 10 each (d)††††††††††††††††††††††††††††††††† †††† NIL†††††††††††††††††††††††††††††††††††† 281.50

††††††††††† Total profits (a) + (d)††††††††††††††††††††††††††† 664.35†††††††††††††††††††††††† †††††††††† 1171.95

††††††††††† Total number of shares including

potential equity shares (b) + (d)†††††††† 693.20†††††††††††††††††††††††††††††††††††† 974.70

††††††††††† Diluted earnings per shares††††††††††††† ††† 0.93 ††††††††††††††††††††††††††††††††††† †††††1.20

 

15††††††† Previous year figures have been regrouped / recast wherever necessary.